Stocks were mixed in intraday trading on Monday at the start of a big week for economic indicators, with GDP data and the Fed’s preferred inflation gauge on deck.
The Nasdaq Composite traded 0.1% higher Monday afternoon, while the Dow Jones Industrial Average ticked down 0.1% and the S&P 500 slipped 0.2%.
The Fed will be looking at Personal Consumption Expenditures (PCE) price index data for more evidence of durable, sustained disinflation. And Wall Street will be listening closely to Fed officials, several of whom are scheduled to speak at various events after the data is released on Thursday.
Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) reported strong fourth-quarter earnings and a record cash pile when it released results on Saturday. Other companies reporting this week include Lowe’s (LOW) on Tuesday, Salesforce (CRM) on Wednesday, and Anheuser-Busch InBev (BUD) on Thursday.
Stocks gained ground last week after a fourth consecutive quarter of blowout earnings from Nvidia (NVDA) breathed fresh life into the AI rally.
Is the Curse of the Dow Coming For Amazon?
16 minutes ago
Being added to the Dow Jones Industrial Average—a select group of just 30 major companies lauded for their longevity and stability—should be a reason to celebrate, right? Well, turns out the companies leaving the index may be the real winners (at least in the near term).
It’s called the Curse of the Dow, and the theory goes that the stocks that are dropped from the Dow outperform those that replace them. While there are exceptions, the theory has mostly held water for the last decade.
In August 2020, Amgen (AMGN), Honeywell (HON), and Salesforce (CRM) replaced Exxon Mobil (XOM), Pfizer (PFE), and Raytheon, now RTX (RTX). Amgen and Salesforce fell 10% and 2%, respectively, in the 12 months after being added to the index. Honeywell gained 40%. Meanwhile, Pfizer climbed 28% in the same period, Exxon Mobil rose 36%, and Raytheon gained 39%.
Though looking at pre-reconstitution performance suggests the reversal of fortunes may have more to do with the cyclical nature of the stock market than with any real drawbacks of being in the Dow. In the year leading up to their removal, Pfizer—boosted by COVID-19 vaccine development—gained 6%, Raytheon fell 20%, and Exxon lost 41%. But Honeywell, Amgen, and Salesforce were all in the green—the latter rose 75%.
The Sept. 23, 2013, shake-up, in which Nike (NKE), Visa (V), and Goldman Sachs (GS) replaced Alcoa (AA), Bank of America (BAC), and Hewlett Packard (HPQ), presents a textbook example of the phenomenon. Of the three additions, Nike performed the best after being added, posting a 16% gain in one year. In that same period, Bank of America, the worst-performing of the three dropped companies, rose 20%. Alcoa, far from a growth stock, gained 89% the year after being removed.
Of all the changes since 2013, only one doesn’t support the theory: Apple (AAPL) replacing AT&T (T) in 2015. Apple rose 2% the year before joining, while AT&T in that same period rose 69%. A year after the swap, Apple was up 15% and AT&T was down 17%.
Amazon (AMZN) stock was down 0.2% late in the afternoon Monday, its first day of trading as a Dow member.
Kroger Dips as FTC Sues To Block Albertsons Merger
1 hr 5 min ago
Shares of Kroger (KR) fell after the Federal Trade Commission filed a lawsuit in federal court Monday opposing its acquisition of Albertsons (ACI), a $24.6 billion deal announced in 2022 that would create a chain of 5,000 stores.
“Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” Henry Liu, director of the FTC’s Bureau of Competition said in a press release.
Kroger and Albertsons contend the suit is misguided because the merger would lead to more competition and lower prices for customers. The companies argue the merger is essential for them—America’s largest grocery chains—to compete with larger multi-channel retailers like Walmart (WMT), Amazon (AMZN), and Costco (COST).
The FTC said the merger would eliminate existing competition between Kroger and Albertsons, leading to lower wages for store workers as well as higher prices.
Kroger stock traded 1.9% lower Monday afternoon, while Albertsons stock was up 0.5%.
What You Need To Know Ahead of Salesforce’s Earnings Report Wednesday
1 hr 53 min ago
Shares of Salesforce (CRM) climbed more than 3% in intraday trading on Monday in anticipation of the enterprise software company’s fourth-quarter earnings report after the bell Wednesday.
Salesforce is expected to swing back to profitability after posting a loss in the year-ago period, with the rollout of various artificial intelligence offerings expected to drive gains in its data cloud operations.
Analysts expect Salesforce to report quarterly net income of $1.26 billion according to estimates compiled by Visible Alpha, a reversal from net losses of $98 million in the prior-year quarter due to restructuring costs. Diluted earnings per share (EPS) is forecast at $1.29, compared with a loss of 10 cents per share the year before.
Revenue for the quarter is expected to rise 10% to an all-time high of $9.2 billion, though that would represent the slowest revenue growth for Salesforce since it went public in 2004.
See here for more about what to know ahead of Salesforce earnings.
Micron Stock Jumps on Production of AI-Powering Memory Chip
2 hr 38 min ago
Micron (MU) shares jumped Monday after the memory chip maker said it had begun mass production of a High Bandwidth Memory 3E (HBM3E) product that will be incorporated into Nvidia’s H200 Tensor Core graphics processing unit (GPU).
The chip, Micron said, delivers 1.2 terabytes per second of memory bandwidth and consumes 30% less power than competitors. The H200, which Nvidia (NVDA) unveiled in November as an improvement on its H100 chip, is expected to begin shipping in the second quarter of this year.
“AI workloads are heavily reliant on memory bandwidth and capacity, and Micron is very well-positioned to support the significant AI growth ahead through our industry-leading HBM3E and HBM4 roadmap,” said Micron’s chief business officer Sumit Sadana in a statement Monday.
Shares of Micron were up more than 6% Monday afternoon, putting the stock up 56% in the past year.
Domino’s US Business Gains Help Boost Stock to 2-Year High
3 hr 20 min ago
Domino’s Pizza (DPZ) delivered better-than-expected profit on the strength of its U.S. business, raised its dividend, and added to its stock buyback program. Shares were up over 6% early Monday afternoon.
The pizza delivery chain reported fourth-quarter earnings per share (EPS) of $4.48, above forecasts. Revenue rose 0.8% from a year ago to $1.4 billion, short of estimates.
The company’s U.S. same-store sales increased 2.8%, three times the gain a year ago and ahead of analysts’ predictions. International same-store sales were up 0.1%.
Domino’s announced that it was boosting its quarterly dividend to $1.51 per share from $1.21, which will be paid March 29 to stockholders of record March 15.
Shares of Domino’s Pizza advanced to their highest level since January 2022 following the news.
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Alcoa Stock Slides After $2.2 Billion Takeover Offer for Alumina
4 hr 28 min ago
Shares in Alcoa (AA) fell 4% in early trading Monday after the aluminum producer made a $2.2 billion all-stock offer to buy its Australian joint-venture partner Alumina (AWCMY) in a bid to expand its global mining footprint and consolidate its operations.
Under the terms of the proposed transaction, which was announced Sunday, Alcoa is offering 0.02854 of its stock for each Alumina share, representing a 13% premium to Alumina’s Friday closing price of 1.02 Australian dollars ($0.67). If the deal succeeds, Alumina shareholders will take a 31% stake in the combined entity with Alcoa shareholders retaining the remainder.
Melbourne-based Alumina said that its board backed the takeover offer, but cautioned there was no certainty the proposal would succeed.
Although the 50-day moving average sits positioned below the 200-day moving average to indicate Alcoa shares remain in a downtrend, the price has traded mostly sideways since late October. A horizontal line connecting a series of price actions over the past nine months may provide overhead resistance around $34.50, while the stock’s 2023 low at $23.07 could act as a key support level.
Amazon Joins Dow Jones Industrial Average, Cementing Blue Chip Status
5 hr 19 min ago
Amazon (AMZN) joined the Dow Jones Industrial Average on Monday, booting Walgreens Boots Alliance (WBA) in the first index shake-up in nearly four years.
S&P Dow Jones Indices said the decision to swap Walgreens for Amazon was made to increase the index’s exposure to consumer retail and reflect “the evolving nature of the American economy.” The change was prompted by Dow-component Walmart’s (WMT) decision to split its stock 3 to 1, thereby reducing its share price and its weight in the price-weighted Dow.
Walgreens was added to the blue-chip benchmark in June 2018 when it replaced General Electric (GE), the longest-lasting original Dow component. Since then, the stock has lost more than two-thirds of its value as it has struggled to compete with larger retailers—like Walmart and Amazon—who have launched pharmacies of their own.
Amazon is now the third-most valuable company in the Dow, behind Microsoft (MSFT) and Apple (AAPL). But unlike the S&P 500, which is capitalization-weighted, its size doesn’t give it more influence over the index. UnitedHealth Group (UNH), with its $530 share price, is the company with the most power to move the Dow.
Amazon is also the youngest company in the Dow. It was founded by Jeff Bezos in 1994, a full 10 years after the Dow’s second-youngest component, Cisco Systems (CSCO).
Stocks Making the Biggest Moves Premarket
6 hr 18 min ago
Gains:
- Li Auto Inc. (LI): Shares of the electric vehicle (EV) maker jumped 11% after it reported revenue doubled in the fourth quarter from a year ago while margins expanded despite an ongoing EV price war.
- Domino’s Pizza Inc. (DPZ): Shares of the pizza chain rose more than 6% after it reported fourth-quarter earnings rose from the prior year, surprising analysts who had forecast lower profit.
- Berkshire Hathaway Inc. (BRK.A, BRK.B): Shares of Warren Buffett’s conglomerate gained about 2% after the company reported its cash pile swelled to a record $167 billion in the fourth quarter.
Losses:
- Intuitive Machines Inc. (LUNR): Shares of the space exploration company tumbled 23% after its lunar lander, Odysseus, tipped over. Intuitive became the first company to land a spacecraft on the moon last Thursday.
- Moderna Inc. (MRNA): The vaccine maker’s shares lost about 2% after HSBC downgraded the stock to “reduce” from “hold,” citing the company’s uncertain revenue outlook as it transitions from primarily selling COVID-19 vaccines to new drug candidates.
- Alcoa Corp. (AA): Shares of the aluminum producer dipped about 1% after it offered to buy Australia’s Alumina AWC for $2.2 billion.
Stock Futures Little Changed Ahead of PCE Week
7 hr 6 min ago
Futures contracts connected to the Dow Jones Industrial Average were within 0.1% of Friday’s close in early trading Monday.
S&P 500 futures were flat.
Nasdaq 100 futures ticked up about 0.1%.
